U.S. Treasury Secretary Paulson is on a trip to Europe and Russia to explain how Washington is working to resolve the U.S. economic problems, just as signs emerge of a sharper slowdown in Europe than had been previously detected.

BRUSSELS (Reuters)
- The U.S. economy is facing a tough second quarter and Europe will not
be immune to the impact, U.S Treasury Secretary Henry Paulson was
quoted as saying on Wednesday.

"There's no doubt that the second quarter will be a tough quarter,"
Paulson told the International Herald Tribune in an interview. "There's
no doubt in any of our minds that the high oil prices are going to have
an impact."

Paulson is on a trip to Europe and Russia to explain how Washington
is working to resolve the U.S. economic problems, just as signs emerge
of a sharper slowdown in Europe than had been previously detected.

Denmark said on Tuesday its economy was in recession, the first EU
state to report that its output shrank for two quarters in a row.

U.S. data also on Tuesday added to concerns that the United States is facing weak growth combined with high inflation.

Paulson told the IHT that the U.S. woes would have an impact on Europe.

"I've never been one to accept the decoupling theory," he told the newspaper. "In a global world, we're all interrelated."

A weaker Europe could also hurt the U.S. economy due to a lower
demand for U.S. exports, Paulson said, adding emerging economies would
now give the biggest lift to global output.

Paulson has used his trip to reinforce the message from Washington
that the U.S. administration believes in a strong U.S. dollar.

But he declined to comment on the divergence in interest rate
policies of the U.S. Federal Reserve, which has cut rates, and the
European Central Bank, which is expected to raise them on Thursday.